New federal rules aim to prevent discrimination -- and provide better health coverage
April 16, 2001
By Dana Shilling
Health insurance can be almost as important as a salary, especially for people who aren't currently working, but could do so with reasonable accommodations and access to adequate medical care. Insurance opens up access to health care. Those who are discriminated against by being denied access to group health insurance are often, in effect, being denied access to economic independence as well.
But employers aren't just one-dimensional bad guys. If they have employees in the employer group health plan who make a lot of health claims for themselves (or for spouses or dependents who have disabilities or chronic illnesses) then their premiums may go up, or they may even be turned down by insurance companies. Federal law imposes some obligations with respect to this issue -- such as making insurance available to groups that include employees or dependents that have chronic illnesses -- but they aren't always obeyed.
A 1996 federal law, the Health Insurance Portability and Accessibility Act (HIPAA) tries to deal with some of these concerns. On January 8 of this year, three federal agencies -- the IRS, Department of Labor Pension and Welfare Benefits Administration, and the Health Care Financing Administration (which runs Medicare and Medicaid) got together to publish new rules to bring employees with chronic illnesses or disabilities closer to being treated on equal footing when it comes to availability and cost of coverage under an employer's group health plan. After July 1, 2001 employers will have to begin complying with the new rules at the start of their health plan's new cycle, which is often based on a fiscal, rather than a calendar year.
Under HIPAA, employer group health plans are forbidden to discriminate on the basis of "health factors." There are eight health factors deliberately defined to overlap so employers can't point to small distinctions among employees with different health situations to justify health insurance discrimination. The factors are:
However, it is legal for employers to treat "late enrollees" -- employees who don't sign up for the health plan as soon as they become eligible -- less favorably than those who enroll on time. So be sure to learn about the eligibility provisions when you take a new job, and sign up as soon as possible.
The point of HIPAA, as carried out by the three agencies' new rules, is to make sure that all "similarly situated" individuals have the same access to the health plan. Individuals can't have their access limited because of their health problems. Unfortunately, it is still legal for employers to impose limits (e.g., $250,000 lifetime benefits or 100 mental health visits per year) that apply equally to all employees or all employees in the same corporate division, job title, or classification. In truth such limitations will be more likely to affect a person with a disability than a non-disabled person.
The employer is prohibited from using any health factor to force an individual to pay a higher health insurance premium or larger deductibles and coinsurance than other, similarly situated employees who are not affected by the health factors.
The rules forbid two provisions sometimes used to keep individuals out of employee group health plans: "nonconfinement" and "actively at work" provisions. A "nonconfinement" clause says that you can't join the health plan if you're in a hospital or other medical institution on the date that you would otherwise qualify for participation. The "actively at work" provision denies coverage to anyone who is out sick or injured on the day coverage would otherwise begin.
Favorable Treatment Permitted
However, if employers want to actually provide more favorable treatment to employees affected by health factors, that's permitted under the new rules, and is not considered discrimination. For instance, the plan might make coverage available to employees who can't work because of a disability. Dependents with disabilities might be covered under the plan after age 23, whereas non-disabled children are generally excluded from coverage at that juncture. Employees might be allowed to pay reduced premiums, deductibles, or coinsurance at a time when they or their family members have a health crisis.
Make sure your company's human resources department is aware of the new rules, perhaps by having an informal discussion or sending an e-mail with an article about the new rules. Newsletters about human resources often cover these developments. If you think a violation of the new rules has occurred, use the company's internal grievance and complaint channels first. If you can't work the problem out, you may be able to get the federal Department of Health and Human Services to take enforcement steps against the insurer that covers the employee health plan. The Department of Labor can penalize employers whose health plans violate the Employee Retirement Income Security Act and employees can bring related suits to federal court. The Department of the Treasury can impose tax penalties on companies that do not comply with HIPAA.
For More Information
The rules appear in Volume 66 of the Federal Register starting at page 1378 January 8, 2001, and available online at http://www.access.gpo.gov.
The DOL issued a booklet, "Questions and Answers: Recent Changes in Health Care Law." Order a copy by dialing (800) 998-7542.
April 16, 2001